Federico World Travel Services - Essay Example

?Federico World Travel Services Summary: Federico World Travel Services (FWTS) offers non-stop travel connections. Directed by a strong team with special expertise, FWTS is dedicated to becoming an international brand assisting the travel of thousands of guests. FWTS is an eco-green Corporation that offers world travelers the opportunity to discover the world by pricing hotels, utilizing connections with businesses and co-workers through social networking, offering information about destinations, and booking flights and hotels for all types of vacation. FWTS is concentrated on a friendly eco green environment that is both memorable and entertaining, giving the brand first class value. the company employs many revenue flow plans involving membership up-grade packages, Hotel and advertising packages for domestic airlines and outsourced advertising packages, the sales or brokering of accounting software, and subscription benefits for hotel chains. Primary traffic will originate from the free information provided to our FWTS customers and the world, using reviews, travel advice, local news resources, links, a blog, pictures, videos and universal articles, and allowing search engines to deliver guests to FWTS at no direct price. The earnings are generated perpetually as members submit content and new members are attracted, thereby attracting new advertisers. The brand model is developed specifically to fit an exponential function growth curve. Product and Services: Consultation related to activities and the complications of traveling Reservation and lodging facilities Special customized packages for travelers Pre-arranged tours Supplemental services also include helping customers in cases related to the acquisition of passports. Mission Statement: The mission statement of FWTS clearly illustrates the scale of services, its diversity, and the target market for which the business intends to offer its services. Industry: Developing an approach of understanding the different kinds of applications that can be used primarily for improving the reputation of their businesses. Therefore, the strategic interests of businesses have leaned towards the e-commerce industry, which was later symbiotically affiliated with the Internet. Business Objectives and Goals: To shift attention towards things that carry a more “sustainable” functioning procedure and image. FWTS labels itself as a full-service tourism business. If its suppliers fail to live up to these expectations, they will be expelled from the corporation. Competitive Advantages: FWTS is always creating new ideas to improve the company and discovering new adventure destinations. The company strives to improve travel facilities, equipment, and technology and adopt the strategy of price leadership. Strengths: The market and size of the travel industry is continuously growing FWTS receives a majority of the customer base Weaknesses: FWTS is not very popular among people above 40 years of age, and does not capture a fair share of this specific market. Conclusion: In these competitive times, all organizations intend to introduce measures to being bring creativity to their marketing strategies and advertise the products they provide. Topic: Federico World Travel Services Introduction A marketing plan is the guideline to all the activities that a company uses to penetrate the industry market in order to sell its products and have a share in the market (Micheal,2010). To start with when formulating a marketing plan solid industry and market analysis is vital (Michael & Susan, 2007). In the travel industry, the current players such as Air America, Fly emirates, Air Dubai do not satisfy customer needs because the market is too big for them to exhaust. Therefore, FWTS will take advantage of these weaknesses to satisfy customer needs and penetrate the market. Also, the current major players in the industry are poorly distributed only in the major cities again this is a major weakness which FWTS will capitalize on, by providing its services everywhere in the world. Also, the ability to get access to the world travel service through the internet and social networks this will increase the company’s clientele base. After the market and industry analysis, it is important to determine the market segment, this is determined by size of the population, customer needs, Geographic’s, buying patterns among others (David, 2008). Given that the size of the population is increasing the current players does not cater for all the customers in need of services, therefore, FWTS will take advantage of this big population. Also, FWTS has identified customer needs and has worked towards satisfying by giving them what they want and deserve. Another market segment is buying patterns the customers tend to buy from new players in the market who have unique and best services, therefore, the FWTS will benefit from this. This will help FWTS provide services to customers when they need them which is very convenient. To develop a marketing plan, all the marketing trends related to social, economical, technological, competitive and regulatory forces related to the product should be identified (Malcolm, 1999). In this product, world travel services, marketing trends related to the forces are; to the social forces are linking with business associates and co-workers this through the company’s different services. The economical forces are the prices of the company’s services which are relatively low compared to other companies in the industry, large flow of revenue. The technological forces are up-grade membership packages, Hotel and advertising packages for domestic airline, private travel industry and outsourced advertising packages, sales or aviation broker of accounting software and subscription benefits for hotel chains. Competitive forces are that the company is providing services different from other companies’ at a cheaper price. Regulatory forces are located in eco green environment. The above force comes as an opportunity for the FWTS to penetrate the market. Consumer analysis of FWTS targets 25% of the world population annually with expectations of this raising in future. This part of the population is mainly tourist, with tourism rising with 4% annually. The world population is increasing day by day and the current players in the industry find it hard to serve all of them. The agency driving forces is the incapability of the current players to serve the world population and charging highly substandard services. In conclusion, the FWTS marketing plan if followed to the latter it will lead the company to being one of the major players in the market. Marketing Plan Marketing and product innovation are the most important advantages that companies can rely on in order, to succeed and survive in the market place. A marketing plan is a guide that organizations rely on for a period of time in the future. It guides the employers internally as well as helps raise capitals from external audiences. Debelak (2000) claims that marketing plan is a significant part of a business plan. It includes information about services, prices, and products. One needs to know how the main competitors are fairing because they constantly keep coming up with new strategies to attract customers. One should also consider key government policies that can affect the operational of a business when coming up with a marketing plan. Information Source of data Time Measurable information, like how to increase customers. observation Period of one year. Accessible, for example, distributing your products or services to other regions web search Within a period of 2 years. Distinguishable information, like looking at key competitors strong and weak points Internal data Within a period of I year Relevant, information in terms of developing marketing mix for each segment chosen. Surveys and questionnaires Within a period of 6 months Feasible, approaches for each segment with specific marketing program. Surveys and questionnaires Within in a period of one year Debelak (2000) claims that, market analysis comes in handy after coming up with a market plan. For example, it outlines business objectives, like increasing customers from 5 percent to 10 percent during the year. When it comes to market analysis, the world travel services may decide to distribute their services in additional states in coming years. Westwood & Institute Of Directors (2002) asserts that before a company implements expansion plans, it should first of all determine the size of each market as well as money spent on the available services, which will help forecast profits and sales in those businesses. One should also write down business key competitors, in addition to, their weaknesses and strengths. This will help World Water services have an opportunity to match their own strong and weak points. Service and product planning are cornerstones of any business. World water services should therefore, decide if it should introduce new services, and features in the coming year or after five years. However, before introducing the service in the market, the company should test the new services through customer surveys and focus groups. For example, in such a case, World Water services can conduct a phone survey in order to determine how many customers will be willing to test their new services and how they are going to distribute it. This will help identify key advantages of one’s services and products over competitive products (McDonald, 2011). Promotional plans in such a case become an important factor that World Water services can consider. For example, it should outline various effective promotional plans that it will use in order to reach its customers. For example, for a tour company, it can consider using coupons as one of the advertising medium that will help allocate a large portion of the advertising budget in the marketing plan. Coupons magazines for example, can be predominant advertising medium for world water services (Westwood & Institute of Directors, 2002). When Federico World Water Services include market analysis, service and promotional plan, it will definitely be successful. This is because it will have all the relevant information that it needs in the future. Additionally, it will be easy to follow the above-explained steps and focus on the direction and market planning process. For example, by identifying its market competitors, it will be able to determine and realize its weak and strong points, and as a result, come up with new strategies of offering their services (Debelak, 2000). Some of the three approaches that are used to develop a sales forecast in an organization are direct and lost horse forecasts. Any kind of business should have an estimate of future sales. A company’s budget cannot be developed without a carefully planned forecast. McDonald, (2011) claims that forecasts are needed to control a business since it is impossible to evaluate a business performance without measuring what is anticipated. The sales forecasts are needed by both the managers, financial officers and accountants in order to base their budgeting and planning work on forecasts sales. Therefore, the World Water Services need to look into their sales forecasts while coming up with a budget. Surveys of knowledgeable group are also another important approach that a business may use to obtain information, for example, an estimate of the sales force and potential buyers. This is also an important factor when it comes to developing a forecast, which helps determine why sales fluctuate. McDonald (2011) argues that it is the most difficult time and confusing phase when it comes to sales forecasting. However, it is difficult to determine or predict how sales will move. Whenever a company determines how their sales are fluctuating it is easy for it to create a specific sales forecast. Statistical methods are another approach that involves an extended pattern that is observed in past data into the future, for example, linear trend extrapolation. The extended pattern is said to complicate the task of forecasting as well as data observed in future. Critical success factors Innovative marketing campaigns Experienced and cohesive working team Large capital base Innovative services Competitive business strategies Compliance to existing legislations References Debelak, D. (2000). Streetwise marketing plan: Winning strategies for every small business. Holbrook, Mass: Adams Media. McDonald, M. (2011). Marketing plans: How to prepare them, how to use them. Chichester: Wiley. Westwood, J. & Institute Of Directors. IOD. (2002). The marketing plan: A step-by-step guide. London: Kogan Page. Marketing Strategy Federico world travel services and products offer what consumers need, and therefore, all it needs is to fine-tune its marketing strategy that will efficiently showcase its offers to its target audience. However, before tweaking its advertising strategies, it should conduct research as Krishnamacharyulu (2011) claims that the more you get to know about the target audience, the stronger its product promotion becomes. Market segments Differences of the products Ideas for new products Tourists Local travelers Demographics Socio economic Generation Product usage Use diverse venues to market new products. For example, email marketing, radio, billboards, television spots and print advertising The market segments should satisfy accessibility, parsimony, and external and internal homogeneity. Product life cycle will occur when the company introduces new product and services are introduced in its target audience. However, the profits are minimal and sales grow slowly. Many organizations lack profit because of large costs of investment in developing their products. The main objective of marketing at this stage is to motivate trial and build consumer awareness. This is usually the initial purchase of products by a customer. Some of branding and packaging strategies that Federico World Travel Services can think of is the promotion and advertising strategies in order to build and stimulate awareness among its target audience. World Travel Services can therefore, decide to invest heavily on introduction of new products and services to stimulate awareness (Krishnamacharyulu, 2011). Key marketing mix that might be suitable as revealed in figure 1.1 is maintaining product and service loyalty and stimulating awareness. Promotion and advertising expenditures in this stage will help in stimulating demand for the new services and its desire for unique brands. However, some of the branding and packaging strategies that will be appropriate in this offering are; promotion and advertising expenditure when it first introduces new products and services. By promoting its services and products, it will motivate the primary demand, as well as desire for class products rather than specific brands. Lamb and Hair (2011) argue that for a company to gain attention it should focus on creating a selective demand, which is the specific brand first choice. It can also think of gaining distribution by restricting variations of the new services and products in order to control its quality. To add to this, it can either introduce pricing by either low or high prices. For example, if it uses a high price, it will be part of helping the company recover its development costs, in addition to capitalizing prices. McDaniel and Hair (2009), claim that a high price attracts potential customers to new products or services than low prices. References Krishnamacharyulu, C. (2011). Rural marketing: Text and Cases. Chennai: Pearson. Lamb, C, & Hair, J. (2012). Essentials of marketing, Mason, Ohio: South-Western Cengage Learning. McDaniel, C, & Hair, J. (2009). MKTG42010, pp 25, South-Western Cengage Learning. 1) Preliminary Pricing $400 (details in the appendix) a) Pricing Objectives and Constraints Pricing objectives are determined by a business’ financial and business goals (Boone & Kurtz, 2010). In this case therefore, the financial and business goals of Federico World Travel Services have to be considered. The company aims at building its reputation as a sustainable service provider and as well as expanding the business. Financial aim would be to increase profit. The company gets its profits from advertising packages, up-grade membership packages, subscription benefits and from the accounting software. Increasing its profits therefore means increasing its market share so that new advertisers and members are attracted. Pricing objectives therefore are: to increase profit and for business growth. Pricing constraints are those from government regulations and laws on pricing, the company’s breakeven point and consumer demand (Dunne, Lusch & Carver, 2010 and Ewing Marion Kauffman Foundation, 2006). b) Three Possible Prices Considering the Effects of the Customer and the Competitors i. Lower Prices By The Competitors Due To Low Demand Or Other Competitor Actions:$280 Pricing is a determining factor for consumer purchase. With very low prices, the consumers may not believe in the prices, a competitive pricing therefore is advisable. ii. High Pricing Due To High Demand By Customers And Increased Prices By Competitors: $650 iii. Preferred Pricing: $400 (details of above in the appendix) c) Federico World Travel Service Fixed Cost and Unit Variable Cost These are assumed costs for calculation purposes only. Fixed cost for offering service to one customer: $ 21,000,000 Unit variable cost offering service to one customer: $ 5,000,000 Total cost : $ 26,000,000 d) Break Even Points for the Three Prices Breakeven point is the point at which the total revenue equals the total cost. Formula = Fixed costs Gross Margin Percentage Gross Margin Percentage = Sales Revenue-Variable Cost Sales Revenue Gross Margin Percentage for A: = $28,000,000 - $5,000,000 X 100 $28,000,000 = 82.1% Gross Margin Percentage for B: = $65,000,000 - $5,000,000 X 100 $65,000,000 = 92.3% Gross Margin Percentage for C: = $40,000,000- $5,000,000 X 100 $40,000,000 =87.5% Break Even points A: Fixed Costs Contribution Margin ration =$ 21,000,000 82.1 = $25,578,563 B: =$ 21,000,000 92.3 =$ 22,751,896 C: =$ 21,000,000 87.5 =$ 24,000,000 Break Even Chart for prices A, B and C 2) Modification of the Prices (a) Pricing considerations for demand, cost, profit and competition-oriented approaches A: From $ 280 to $340 B: From $400 to $340 C: From 650 to $340 This organization is focused on increasing the volume of the market in order to make profit. The costs are assumed to be constant and competition is covered since $340 is close to the lowest price that can be set by competitors and far from $650 hence will attract more customers. (b) Possibilities for discounts, allowances, and geographic adjustments. The price is set at $340 for all the three prices. Break even Analysis: $ 340 to $400 give the same amount of sales and so for increased volume of sales for customer attraction, the price should be set at $400. At this price, the company still makes profit, can cover for any discounts, allowances and geographic adjustments. With this price, the risk of incurring losses is reduced when demand goes down, when the cost of production increases and when the company faces competition. Works Cited Boone, L. E, & Kurtz, D. L. (2010). Contemporary Business (3rd ed.) John Wiley and Sons. Dunne, P. M., Lusch, R. F. and Carver, J. R. (2010). Retailing. 7th Ed. Mason, OH: Cengage Learning, 2010. Ewing Marion Kauffman Foundation. (2006). Pricing Constraints. Kauffman Foundation Program. Retrieved on 26th November, 2011 from: http://www.entrepreneurship.org/~/media/Files/Resource%20Center/Communities/Entrepreneurship/Pricing%20Constraints.pdf Jackson, S. R., Sawyers, R., B. & Jenkins, G. J. (2008). Managerial accounting: A focus on ethical decision making (5th ed.) Ohio: Cengage Learning. Nelson, S. L. (2008). QuickBooks: All-in-One Desk Reference for Dummies (4th ed.) New Jersey: For Dummies. Appendices Preliminary Pricing Service Price/Charges per customer Expected customers (1,00,000) Activity and travelling consultation $ 70 $ 7,000,000 Lodging and reservation services $ 10 $1,000,000 Travelers’ special custom packages $ 100 $10,000,000 Pre-arranged tours $ 200 $20,000,000 Acquisition of passport services $ 20 $2,000,000 Total $ 400 $40,000,000 i. Lower Prices By The Competitors Due To Low Demand Or Other Competitor Actions Service Price/Charges per customer Expected customers (1,00,000) Activity and travelling consultation $ 50 $ 5,000,000 Lodging and reservation services $ 10 $1,000,000 Travelers’ special custom packages $ 80 $ 8,000,000 Pre-arranged tours $ 120 $12,000,000 Acquisition of passport services $ 20 $2,000,000 Total $ 280 $28,000,000 ii. High Pricing Due To High Demand By Customers And Increased Prices By Competitors Service Price/Charges per customer Expected customers (1,00,000) Activity and travelling consultation $ 100 $ 10,000,000 Lodging and reservation services $ 20 $2,000,000 Travelers’ special custom packages $ 200 $20,000,000 Pre-arranged tours $ 300 $30,000,000 Acquisition of passport services $ 30 $3,000,000 Total $ 650 $65,000,000 iii. Preferred Pricing Service Price/Charges per customer Expected customers (1,00,000) Activity and travelling consultation $ 70 $ 7,000,000 Lodging and reservation services $ 10 $1,000,000 Travelers’ special custom packages $ 100 Pre-arranged tours $ 200 $20,000,000 Acquisition of passport services $ 20 $2,000,000 Total $ 400 $40,000,000 In line with the mission statement of Federico World Travel services, the fundamental concern is definitely to formulate a marketing strategy that will indeed make the organization the best choice in the whole industry. The range of services offered is certainly broad and this creates the need to design a marketing strategy that can effectively ensure success in the increasingly competitive environment. The intermediaries in the marketing plan will play very strategic roles in the supply and sale of the company’s brand so that it identifies with the consumers. The hospitality industry is indeed flooded with myriad players each on the move to outdo the other. As such, Federico World Travel Services is very keen to reduce the number of intermediaries in its supply chain as much as possible so as to address the needs of the clients in the best way possible. A long distribution channel is never appropriate in service delivery which is the focus of FWTS. The company is therefore intending to establish its own chains centrally managed from the headquarters so that customer satisfaction is given the most priority. Considering the wide range of services on offer at FWTS, a single distribution channel can never operate efficiently for the organization. The different units will have slightly modified channels of distribution depending on the nature of service offered. For instance, the tours department will have an almost direct contact with the prospective clients so as to enhance effective service delivery. The travel industry has been booming in the recent times courtesy of several environmental factors (Miles, 2007). In a bid to take advantage of this boom, FWTS has distinguished itself as a first rate service provider eager to capture the market as soon as possible. This is only possible through a one-on-one touch with the clients so as to avail customized services that can match up the standards of this age. The promotion strategy of the company is also very critical in ensuring market penetration. FWTS is therefore adopting a very comprehensive promotional strategy that borrows on the envisioned strength and capabilities of the company. As a first strategy, a wide range of consumer oriented promotions have been designed to create awareness amongst the prospective clients on the existence of as new entrant into the market. These strategies will include sales premiums, displays and coupons. Such strategies will come in handy in the flooded travel market. Nevertheless, it is hoped that the progress of the services in the market will be pretty fast as a consequence of the comprehensive marketing strategy in place. The company hopes to cut its own niche in the travel industry by targeting not only professionals who travel for business purposes but incorporating holiday makers as well. This will ensure a continuous availability of clients despite seasons and the time of the year. Considering the variable target audience envisioned, the promotion process will cut across entirely all channels of communication so as to reach as many people as possible. It is expected that the budget of the initial promotional activities will be very high but hopefully the cost will be justified. Similarly, the promotion process is expected to be a continuous process with much focus in the initial stages of the formation of the company. The success of the marketing strategy above lies in the fact that the industry has been growing rapidly as market demand for travel-related services increases. It is also hoped that since the company cuts across the whole industry in its service delivery, it has an advantage over most market players who mostly depend on specific sectors of the industry. The organization structure of the company is basically the conventional type but without a centralized decision making organ. Each department has the prerogative to make decisions that suit that particular department. References Baker, M, J. & Hart, S. (2007). Marketing Theory. Sage publications Baker, M, J. & Saren, M. (2010) The Marketing book. Butterworth-Heinemann Kurtz, D. L. (2008). Contemporary marketing. Cengage, Learning. Miles, R. (2007). Organizational Strategy, Structure, and Process. Retrieved: November 30, 2011. Stanford: Stanford University Press. Mc. Donald, M. (1999). Marketing plans. Butterworth-Heinemann Organizational Chart Federico World Travel Services Organizational Chart Gantt Chart Read More